Insurance Vs. Financial Planning

[Grad2010]

Good day,

I'm a recent grad with a Finance and Marketing Bachelor's Degree. I was originally planning on starting my own business, but it fell through/failed. I have just started job hunting, and I'm thinking about going into financial planning, or perhaps becoming an insurance agent. Any advice from people who have worked in either field would be welcome!

Ben

 

[Full Throttle]

Financial planning is the biggest crock pulled on America. Investment advisors are not financial planners, insurance agents are not financial planners. Both are salesman who may offer their expertise in financial planning to their clients as a value added service.

There is a very small market in true financial planning, charging an hourly fee for advice and there are very few people who actually make a living this way (at least as a primary source). The reason, lack of demand from the public despite what the FPA may tell you. Some can claim they do true financial planning by charging 1% of AUM, but despite being an RIA vs. a RR, the fee is basically a commission that never goes away for the client. If you asked their clients, they pay the 1% to manage their money, not for primarily for "financial planning".

You'll have to decide which is the right market for you. Keep in mind that if you go with an investment firm, you are basically limited to helping households with at least $100,000 in investable assets, although you really need at least $250,000 per household to profitably serve them. If you go with a life insurance based company, you can help smaller fish as a RR because you can be profitable handling their insurance business even if they don't have the investable assets yet.

What does your current natural market look like? How will you get in front of each market? I personally decided the life insurance/IA route was the way to go for me since the target market was so much larger. I figure that I can always tighten it up my minimum new client profile later on if I decide that's best for my business.

 

[TheKoenigGroup]

Financial planning is the biggest crock pulled on America. Investment advisors are not financial planners, insurance agents are not financial planners. Both are salesman who may offer their expertise in financial planning to their clients as a value added service.

There is a very small market in true financial planning, charging an hourly fee for advice and there are very few people who actually make a living this way (at least as a primary source). The reason, lack of demand from the public despite what the FPA may tell you. Some can claim they do true financial planning by charging 1% of AUM, but despite being an RIA vs. a RR, the fee is basically a commission that never goes away for the client. If you asked their clients, they pay the 1% to manage their money, not for primarily for "financial planning".

You'll have to decide which is the right market for you. Keep in mind that if you go with an investment firm, you are basically limited to helping households with at least $100,000 in investable assets, although you really need at least $250,000 per household to profitably serve them. If you go with a life insurance based company, you can help smaller fish as a RR because you can be profitable handling their insurance business even if they don't have the investable assets yet.

What does your current natural market look like? How will you get in front of each market? I personally decided the life insurance/IA route was the way to go for me since the target market was so much larger. I figure that I can always tighten it up my minimum new client profile later on if I decide that's best for my business.

Good post, with everything going on in the health insurance market, I would suggest you find an alternative, annuities and life insurance isn't that bad of a bet right now. To some, an annuity is an attractive retirement vehicle, especially with the uncertainty about the stock market. Just my .02 cents.